* 10-year Treasury yield touched 4.4197%, lowest level since

May 12

* Two-year Treasury yield fell 5.4 basis points to 4.031%

* Markets expect Fed to leave interest rates unchanged

during Kevin Warsh's first meeting as chair

By Tatiana Bautzer

NEW YORK, June 15 (Reuters) - U.S. Treasury yields fell to a

one-month low on Monday as oil prices slid with the announcement

of a preliminary agreement to end the U.S. and Iran conflict.

But the rally is unlikely to change the widely held market

expectations of a Federal Open Market Committee meeting decision

to keep rates steady on Wednesday.

The yield on 10-year Treasury notes fell to

4.4197%, the lowest since May 12, and was last down 4.2 basis

points at 4.443%. Yields move inversely to prices.

U.S. President Donald Trump said the Strait of Hormuz,

through which a fifth of global oil and gas typically flows,

would reopen on Friday and that he had ordered the end of the

U.S. blockade on Iranian ports. WTI oil, the U.S. benchmark, was

last down more than 5% to just above $80 a barrel, its lowest

since early March. But it is still far above the pre-war prices

around $65.

The U.S.-Iran deal is expected to ease pressure on the Fed,

which will hold its first meeting chaired by Kevin Warsh on

Wednesday, to raise rates to curb inflation.

"However, the oil shock is not over and we are not at the

point of reviving hopes of interest rate cuts this year. We

would need more concrete changes in the macro outlook, " said

BMO's U.S. rates strategist Vail Hartman.

The two-year U.S. Treasury yield, which

typically moves in step with interest rate expectations for the

Fed, fell 5.4 basis points to 4.031%.

BMO analysts expect the Fed to leave the fed funds target

unchanged at 3.50% to 3.75%, remove the easing bias from the

official statement, and signal no change in policy rates for the

rest of 2026.

"The most highly anticipated event will be the post-FOMC

press conference by Kevin Warsh," Hartman said, adding that he

expects the new chair to be vague and neutral, as he is opposed

to giving forward guidance. The BMO strategist said the backdrop

favors patience over urgency, considering the uncertainties.

The 10-year TIPS breakeven rate was last at

2.308%, indicating the market sees inflation averaging about

2.3% a year for the next decade.